E-commerce is Booming; Can Australia’s Infrastructure Cope?

Online shopping has become an easy, seamless experience that takes place from the comfort of our sofa or even on the train home, and results in parcels conveniently arriving at our desk or front door a couple of days later.

However, with the rapid expansion of e-commerce, we need to consider whether we have the best process and systems in place to allow for this growth.

Amazon is just days away from launching in Australia, making now a good time to take a step back and ask whether or not we can cope with the exponential growth of online shopping. Jobsite spoke to a range of Aussie businesses in the retail industry to get a sense of how things are looking.

Rising Expectations

Research confirms the growth potential of e-commerce, with NAB’s latest Online Retail Sales Index showing a year-on-year growth rate of 10.3% in August. The recent PayPal mCommerce Index even shows that one in five Australians between 18 and 34 years have actually bought or paid for goods on their smartphone while standing in a physical store.

One in five Australians between 18 and 34 years have actually bought or paid for goods on their smartphone while standing in a physical store.

With a growing availability of all kinds of products and services online, on mobile and in store, customer expectations are rising rapidly, and retailers need to keep up.

According to Wayne Wang, Founder and CEO of the courier service Go People, this increase in expectations is applying pressure on the industry as a whole. “It’s simply not enough to provide next-day deliveries, as consumers are increasingly demanding one to three hour delivers, evening, and same-day delivery options.”

Warehouses of the Future

Perhaps one of the principal reasons that Amazon is such a threat or opportunity for retailers is the way in which they take a truly holistic approach to their offering. From deliveries to in-store experiences, to streaming services, they are constantly looking at ways to meet customer needs and wants.

Recognising that warehouses are generally located on the outskirts of cities due to lack of space, Amazon is developing the concept of vertical fulfilment centres that can be placed in built-up, densely populated urban areas. This would allow the space for drones to fly in and out, without risking the safety of pedestrians down below. Let’s just hope they don’t drop anything.

This would allow the space for drones to fly in and out, without risking the safety of pedestrians down below. Let’s just hope they don’t drop anything.

While this could be the start of a whole new arena for Australian construction, for the time being, Amazon will be launching in Australia with a 24,000 square metre fulfilment centre in Melbourne.

According to Matt Warren, CEO of Veeqo, providers of multichannel inventory management software, Australia presents Amazon with a whole new set of challenges. “Australia has a very different population distribution to many other countries Amazon operates in with broad distances between major cities.

“Success for Amazon will require building key partnerships with select local and regional logistics companies who fit into their customer-centric ethos.”

Hassle Free Deliveries

Indeed, there are plenty of businesses tackling the challenge of improving delivery experiences for Aussie customers. One such business is Sendle, a delivery business focused on helping SMEs through making delivery simple, reliable, and affordable. They have recently secured a major deal with DHL to expand their door-to-door delivery internationally, as well as lowering costs for small businesses looking to increase their global reach.

Jobsite spoke to Sendle’s CMO Craig Davis, about the sophistication of Australia’s current delivery infrastructure and potential ways for the construction industry to facilitate improvements.

“Yes, we believe the delivery infrastructure required to cope with higher online shopping already exists (we are not very different from the US and Western Europe in this regard). But do we have the right systems, practices and culture to support the massive shift is buying behaviour – there, we are lagging. We have been slow adopters of tech and often relied on decade old traditional businesses to solve new world problems.”

Considering potential innovative solutions for developers to assist with delivery experiences such as in-built locker systems, Craig comments, “It’s a bit wishful to think that by changing the lockers at the building sites, parcel deliveries can improve. This is a multi-dimensional problem and is caused by a massive shift in consumer behaviour.

“It’s hard to pick the right solution as things are still evolving, and there is much to change before a winning behaviour emerges. The question that’s universal here is how do you create a safe and secure drop-off location for reasonable size parcels at every building site? Maybe something as simple as CCTV around the drop-off sites could be a solution.

One thing that’s for sure is that new developments will do well to consider the rise of online shopping, such as trialling and improving new systems that provide for easy parcel drop-off, and that the coming months could prove decisive.